Report finds immigrant wage gap costing Canada $50 billion a year in GDP

Report finds immigrant wage gap costing Canada $50 billion a year in GDP

The gap in median earnings is nothing new but has risen over the past three decades

The growing wage gap between immigrants and Canadian-born workers has hit a new high, with new Canadians earning 10 per cent less on average, says a new report.

The gulf, which spans age, gender, region and occupation, is costing the country $50 billion each year, according to an RBC Economics study set for release Wednesday.

The problem stems from a failure to adequately recognize credentials and work experience abroad, said Dawn Desjardins, deputy chief economist at RBC Economics.

About 38 per cent of university-educated immigrants aged 25 to 54 work at a job that fits their education level, compared with more than half of their Canadian-born counterparts.

“That means we’re not really maximizing that education, but as well we’re not necessarily maximizing the experience that some of these workers have,” Desjardins said in a phone interview.

“We’re not really correctly valuing their contribution to Canada’s economy, to the labour market. And therefore we’re leaving on the table, I would say, some of this excess return we could be accruing to the economy overall.”

More than half of the earnings gap — the shortfall is 18 per cent for immigrants aged 45 to 54 with a bachelor’s degree or higher — can be attributed to employers discounting work experience gained in other countries, she said.

The gap in median earnings is nothing new but has risen over the past three decades, climbing to 10.3 per cent in 2016 from 3.8 per cent in 1986.

The report notes that Canada remains popular among — and reliant upon — immigrants. A recent Gallup poll found that the country came second only to the U.S. as a desired destination.

“Pretty good for a country of 37 million with a long winter,” the RBC study states.

ALSO READ: With so many Irish immigrants, B.C. now home to 2nd Irish consulate

ALSO READ: Excluding non-permanent families from Canada Child Benefit unfair: report

Immigrants make up one-fifth of Canada’s population, a number that’s expected to rise to 28 per cent by 2036, according to the report, titled “Untapped Potential.”

“Canada needs to close its immigrant wage gap,” it states, arguing that doing so would boost the country’s annual GDP by as much as 2.5 per cent, or about $50 billion.

Desjardins said the federal government should upgrade its credentials assessments — a “longstanding problem” — to help employers recognize foreign work experience and devote more resources to aiding immigrants’ transition into the workforce.

The report gives a nod to government efforts to fill labour gaps with skilled immigrant workers, including the Express Entry program introduced by the federal Conservatives in 2015, expanded Provincial Nominee programs and beefed-up pre- and post-settlement services.

The earnings gap is particularly stark in manufacturing — about 23 per cent— and agriculture — roughly 16 per cent — and sits at between 10 and 15 per cent in education, law and trades.

The divide is greatest in the Prairies, with hourly wages hovering at about 20 per cent less for immigrants. It is narrowest in the Atlantic provinces, possibly due to efforts to attract a younger workforce, the report says.

In March, Ottawa announced a two-year extension of the Atlantic Immigration Pilot to facilitate hiring of skilled labour and recent graduates. “Programs like this one, that link employment to immigration from the beginning, may be a path towards faster integration and helping immigrants attain greater wage parity,” the study says.

Of 10 sectors profiled, natural and applied sciences is the only one where new Canadians made more on average than those with deeper roots in the country.

Immigrants who arrived before their 16th birthday earn five per cent more on average than workers who were born citizens.

Christopher Reynolds, The Canadian Press

Like us on Facebook and follow us on Twitter.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Shaela Dansereau/Pipestone Flyer
Wetaskiwin City services impacted by new public health measures

Public centers and availability to public impacted by the new public health measures.

Wetaskiwin Composite High School. Shaela Dansereau/ Pipestone Flyer.
Wetaskiwin Regional Public Schools prepare for transition back to online learning

Grades 7-12 will are mandated to transfer to online learning starting Nov. 30, 2020.

Alberta’s chief medical officer of health, Dr. Deena Hinshaw, said growing COVID-19 case numbers continue to be a concern in the province. (Chris Schwarz/Government of Alberta)
Alberta announces 1,077 new COVID-19 cases Thursday

There are currently 14,052 active cases in the province

Shaela Dansereau/ Pipestone Flyer
COVID-19 cases continue to rise in the City of Wetaskiwin

What the new provincial mandates mean for the County and City of Wetaskiwin.

Ridge Meadows RCMP are developing a new strategic plan for the detachment. (Phil McLachlan)
UPDATED: Male wanted for Montana First Nation shooting arrested

Darcy Cattleman located in Conklin, Alta.

The Red Deer Games Foundation has made changes to its grant program as a result of the ongoing COVID-19 pandemic. (Photo supplied)
Red Deer Games Foundation adjusts grant program due to COVID-19 pandemic

The foundation postponed the spring 2020 grant program due to the COVID-19 pandemic

Alexandre Bissonnette, who pleaded guilty to a mass shooting at a Quebec City mosque, arrives at the courthouse in Quebec City on February 21, 2017. THE CANADIAN PRESS/Mathieu Belanger - POOL
Court strikes down consecutive life sentences; mosque shooter has prison term cut

The decision was appealed by both the defence and the Crown

Gold medallists in the ice dance, free dance figure skating Tessa Virtue and Scott Moir, of Canada, pose during their medals ceremony at the 2018 Winter Olympics in Pyeongchang, South Korea, Tuesday, Feb. 20, 2018. THE CANADIAN PRESS/AP-Charlie Riedel
Olympic champions Virtue, Moir and Tewksbury among 114 Order of Canada inductees

Moir and Virtue catapulted to national stardom with their gold-medal performances at the Winter Olympics in 2018

Shoppers line up in front of a shop on Montreal’s Saint-Catherine Street in search of Black Friday deals in Montreal, Friday, Nov. 27, 2020. THE CANADIAN PRESS/Paul Chiasson
Black Friday shopping in a pandemic: COVID-19 closes some stores, sales move online

Eric Morris, head of retail at Google Canada, says e-commerce in Canada has doubled during the pandemic.

skip2
Rimbey Christian School students experience the joy of giving

Grades three and four students raised $2,000 for Somalian children

File Photo
Sylvan Lake Town Council asks for a mask bylaw to be brought forward for consideration

The bylaw would require face coverings in all indoor Town-owned and operated facilities

Most Read